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Exam 3: Adjusting Accounts for Financial Statements

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Question 231

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Match the following terms with the appropriate definition. -A listing of accounts and balances prepared after adjustments are recorded and posted to the ledger.

A) Adjusting entry
B) Unadjusted trial balance
C) Prepaid expenses
D) Natural business year
E) Accrued expenses
F) Adjusted trial balance
G) Report form balance sheet
H) Accounting period
I) Profit margin
J) Contra account

K) A) and D)
L) E) and F)

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Question 232

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A trial balance prepared before any adjustments have been recorded is:

A) An adjusted trial balance.
B) Used to prepare financial statements.
C) An unadjusted trial balance.
D) Correct with respect to proper balance sheet and income statement amounts.
E) Only prepared once a year.

F) C) and D)
G) A) and C)

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Question 233

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Describe a work sheet and explain why it is useful.

An account linked with another account that has an opposite normal balance and is subtracted from the balance of the related account is a(n) :

Based on the following information from Schrute Company's balance sheet,calculate the current ratio. $\begin{array} { | l | r | } \hline \text { Current assets } & \$ 87,000 \\\hline \text { Investments } & 50,000 \\\hline \text { Plant assets } & 220,000 \\\hline \text { Current liabilities } & 39,000 \\\hline \text { Long-term liabilities } & 90,000 \\\hline \text { Retained earnings } & 228,000 \\\hline\end{array}$